Supplier Selection in Make-to-Order Manufacturing

Jinfeng Yue (), Yu Xia, Thuhang Tran and Bintong Chen
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Jinfeng Yue: MTSU Box 75 Middle Tennessee State University

A chapter in Innovative Quick Response Programs in Logistics and Supply Chain Management, 2010, pp 181-201 from Springer

Abstract: Abstract When make-to-order (MTO) manufacturers receive unpredictable custom orders, they face a common challenge: quick supplier selection of custom parts and components. This challenge becomes even more serious when the order’s customization level is high, the MTO’s committed delivery time is short, the desired service level is high, and the missing delivery time penalty is severe. This chapter considers an MTO manufacturer who produces a product consisting of several custom parts that cannot be pre-inventoried. To respond to the custom order quickly, the MTO manufacturer can follow the procedures in this chapter to allocate orders to each supplier for each custom part and calculate the associated replenishment cost as well as the probability of meeting the delivery date, using the suppliers’ jobs on hand, availability, process speed, and defective rate. For a given delivery time and service level, a replenishment cost frontier can be generated to provide a range of options to meet customer requirements. This innovative method can be further extended to the case when the delivery time is not fixed and the manufacturer needs to reduce its delivery time to win a customer bid.

Keywords: Delivery time; Frontier portfolio; Make-to-order; Supplier selection (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1007/978-3-642-04313-0_9

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